The U.S. Supreme Court recently ruled that Donald Trump’s tariffs were unconstitutional, adding fresh uncertainty to global trade relations. This decision comes after Trump imposed a new 15 percent tariff on imports just days ago.
Back in January 2025, shortly after taking office, Trump used the International Emergency Economic Powers Act (IEEPA) to impose controversial tariffs, sparking a trade war. However, the Supreme Court found that Trump exceeded his powers with this action. They stated that tariffs act as a tax, which, according to the Constitution, solely belongs to Congress.
Interestingly, the ruling does not impact tariffs on steel, aluminum, and other specific goods, as those were enacted under different laws.
In response to the court’s decision, Trump didn’t hold back. He labeled the judges “fools” and called for more tariffs, signing an executive order that rolled out a sweeping 10 percent tariff. This was quickly bumped up to 15 percent, the maximum allowed under the Trade Act of 1974.
What is the New Trade Law?
The law Trump is using allows him to impose tariffs to tackle serious trade deficits, but it’s not a long-term solution. Tariffs under this law last for only 150 days unless Congress decides to extend them. According to trade lawyer Shantanu Singh, using this legal authority is unprecedented and likely to face legal challenges.
Despite Trump’s claims that these tariffs counteract a staggering trade deficit exceeding $900 billion, they complicate existing trade agreements. Countries like the UK, India, and members of the EU had already negotiated deals to lessen the impact of tariffs. But with the new 15 percent rate, uncertainty looms over whether these countries will be subject to the new tariffs or stick to previously agreed rates.
The Future of Trade Agreements
The UK’s trade deal with the U.S. aimed to eliminate tariffs on key exports, but the Supreme Court ruling leaves businesses uncertain. William Bain from the British Chamber of Commerce pointed out that these tariffs can harm both U.S. consumers and the broader economy.
China stands to benefit from the situation. Their reciprocal tariffs were already high, but with the U.S. scrapping some, they now find themselves negotiating from a stronger position, as noted by Singh.
Several Southeast Asian countries have also entered agreements to reduce tariffs, but Trump’s latest moves muddy these waters as well. For instance, Malaysia and Cambodia managed to negotiate better rates, but they still face the overarching 15 percent tariff.
What Happens Next?
Trade experts predict that the U.S. government will use the 150-day window to investigate alleged unfair trade practices before trying to reinstate previous tariff arrangements. This period is crucial as it may shape future trade policies.
As nations await clarity, the global economic landscape remains in flux. Countries involved in trade agreements are keenly observing how these developments unfold, knowing that the outcome could significantly impact their economies.
For continued updates, check resources like the U.S. Trade Office for insights into ongoing negotiations and policy changes.
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